Developers launch $3bn national office and residential projects
Private developers are not sitting still, with more than $3 billion worth of projects getting the stamp of approval across the Sydney and Melbourne metropolitan suburbs.
Private groups Fortis and Deicorp, have been the most active with plans lodged for commercial, residential and mixed use towers that will help to put more apartments into the major markets.
Despite economic headwinds and tougher financing markets, large and medium-sized developers are pushing hard to get applications approved to catch the next wave of demand.
In the listed market, Charter Hall said at its interim results on Wednesday that it has started construction at its new $1.8 billion Chifley South development in the core precinct of the Sydney CBD. The construction contract has been awarded to Built and will be a 50,000 square metre tower adjoining the existing building.
Charter Hall Office chief executive Carmel Hourigan, said the group is targeting practical completion in 2027, and is already 55 per cent pre-leased to law firm Gilbert + Tobin, investment bank UBS and Charter Hall.
“Upon completion, the precinct is expected to comprise a $3.8 billion two-tower complex owned by a wholesale partnership with some of Charter Hall’s largest wholesale investors, including GIC, VFMC and TelstraSuper,” Hourigan said.
Fortis has achieved planning approvals for $570 million worth of projects across three major developments in Sydney and Melbourne. Fortis is a private group run by real estate financier and investment manager, Pallas Group.
These include the second tower of the $320 million Wiltshire House in Richmond, inner Melbourne; an $80 million commercial building in Manly and a landmark $170 million precinct in Double Bay with Restoration Hardware (RH).
In Melbourne, the Wiltshire House project is 2,200 square metres over two-towers, designed by architect SJB. Under new plans, the second tower will move from commercial to residential in response to the pent-up demand for residential stock in Melbourne’s inner suburbs.
The new scheme for the second tower will now have 10,000 square metres of premium residential, commercial and retail space, featuring ground-floor retail and hospitality, alongside 50 apartments spanning 11 floors above.
The development approval comes at a critical time for housing supply in the state of Victoria, with Charter Keck Cramer’s most recent State of the Market for the first half of 2023 report revealing that 15,000 to 18,000 new build-to-sell and build-to-rent apartments are required to meet the current levels of demand, yet completions are only forecast to reach 10,500 per year.
In Sydney, Deicorp has gained the green light for its Melrose Central project, which will see the creation of a new town centre in one of Sydney’s western suburbs’ most ambitious urban renewal projects.
In the heart of the 30-hectare Melrose Park North Urban Renewal Project, the project will be composed of close to 500 apartments, around 30,000 square metres of retail space and include a station on the planned Parramatta Light Rail Stage 2 route.
Site works for bulk excavation have commenced, with the total project expected to be completed in 2027 with an end value of about $660 million.
Fortis’s 34-35 South Steyne site in Manly will be anchored by Pallas Capital as a second office on the Northern beaches. The site was bought in 2022 for $23 million covering 1,750 square metres connecting with the South Steyne Corso thoroughfare.
Once completed, there will be commercial office space across three storeys, with retail on the ground floor and basement levels. Durbach Block Jaggers have been appointed lead architects on the project with interiors by Foolscap Studio, landscaping by Wyer & Co and development funding by Pallas Capital.
In Sydney’s east, Fortis acquired the 1,027 square metre RH Gallery site for $49 million in 2021 and will create a design and hospitality destination. Working together with RH, MHN Design Union and Dangar Barin Smith, the $170 million commercial project will be a luxury retail centre for the RH brand.
